May 13, 2009

 

CBOT Soy Outlook on Wednesday: Up; fundamentals, technical buys to support

 

 

Soybean futures at the Chicago Board of Trade are expected to start Wednesday's day session higher, climbing on fundamental strength and technical buying.

 

CBOT soybean futures are seen opening 10 cents to 15 cents higher, with soy product futures up in unison with overnight price strength.

 

Active contracts rose to new highs for the current rally, and traders expect that strength to attract speculative buying, analysts said.

 

Fundamentally, the market is expected to remain underpinned by tight supply and demand fundamentals, with strong export demand, shrinking crop prospects for South American production and planting concerns enticing traders to add risk premium to prices, a CBOT floor analyst said.

 

However, the lack of any other fresh news opens the door for choppy action with participants looking to consolidate some positions on any sign of exhausted buying near session highs, traders said.

 

A technical analyst said market bulls still have the near-term technical advantage, with first resistance for July soybeans seen at last week's high of US$11.31 and then at US$11.40. First support is seen at Tuesday's low of US$11.02 and then at this week's low of US$10.86 1/2.

 

DTN Meteorlogix Weather said Midwest rainfall this week will keep field work and planting slow, especially through the eastern and southern Midwest. Lighter rains also delay and disrupt field work elsewhere in the region, but not as much as the area to the south.

 

In other news, with the bulk of the Argentine soy harvest complete, the crop continues to show extensive drought damage that has hurt quality and quantity, the Agriculture Secretariat said Tuesday in its weekly crop report. Sources in Argentina's Agriculture Secretariat expect the 2008-09 soy crop to total a dismal 33 million metric tonnes, according to a report in local daily Clarin last week.

 

In deliveries, May soyoil deliveries totaled 971 lots. Customer accounts at Man Professional Clearing issued and stopped 754 lots and 837 lots respectively. The last trade date assigned was May 12.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Wednesday, supported by expectations of rising cash prices. Crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday on increased buying in the cash market and concerns about global vegetable oil supply, said trade participants.